US and European futures are heading for a mixed open while investors are more focused on the zero-covid policies in China. There are all sorts of market speculations; some indicate that China will relax those measures much sooner than the current anticipations. There are those gossips that Beijing is in no mood to relax any measures, and the zero-covid policy will eat into the country’s growth. The fact is that a lack of clarity from the government is causing all these rumours. China must step up and clarify its covid related policies as it is the second largest economy in the world. An economic slowdown in China will also hurt the rest of the world.
Over in the UK, the housing market is very much in focus, especially after the pessimistic report that Zoopla released. The report indicates that the housing demand in the UK has fallen by 44%. There is no doubt to see such a sharp decline in the housing demand in the UK as the cost of living crisis is very much in focus. Consumers are struggling to survive or keep up with their bills. There have been some signs that during the recent Black Holiday sale, consumer spending was up by a small margin, but that must have been mainly because of consumers trying their best to stretch their money and taking advantage of deals in the market. The reality is that the UK is in bad shape, and it is only going to get tough as going into next year, mortgage defaults will likely occur as borrowing cost has gone sky high. The UK government has brought any measures to ease any of those measures.
Regarding economic data, traders will be watching the US Consumer Confidence very closely, as this will give them some clues about consumer health in the US. The number is expected to slow down from its previous reading of 102.5. The forecast for today’s number is 100. A slowdown in this number is likely to make traders nervous, and we could see the market players losing some confidence.
Commodities
Oil
Brent and Crude oil prices have finally changed their direction, and they are trading higher today. There is no doubt that prices have been way oversold as per several technical indicators such as the RSI. Bargain hunters are stepping into the market and now trying to support the price action.
On the fundamental side, the OPEC meeting matters the most, as we discussed previously. Will the cartel reduce or increase the oil supply is the question that is going to influence the price action. For the time being, OPEC is in no mood to increase production. It would be silly for the cartel to increase production when oil demand is under the adverse influence because China is under the zero-covid policy. If we do see a change in the Chinese Covid policy, we could see a more positive shift in oil demand, but again that will not be overnight, so even then, OPEC is unlikely to do something big that easily.
Gold
The precious metal is trading higher today as the dollar index has lost momentum. The factor that matters the most here is the Fed’s stance towards its monetary policy. A firm job number could make the Fed think about its monetary policy, and it could adopt an ultra-hawkish monetary policy like before. So far, the hope or anticipation in the market is that the Fed will slow the roll in terms of increasing the interest rate, which has helped the gold prices. The Fed Chairman, Jerome Powell, will be speaking tomorrow, and we also have the US GDP number due. Both data sets are likely to influence the volatility of gold prices.